Finance Minister Muhammad Aurangzeb unveiled the Pakistan Economic Survey 2025-26 on Thursday, characterizing the report as a narrative of resilience, discipline, and renewed confidence over the past fiscal year.
Poverty and inequality on the rise
Despite a recorded GDP growth of 3.7 percent, the survey indicates that national poverty has climbed to 28.9 percent, a significant increase from the 21.9 percent recorded in 2018-19. Income inequality has also widened, with the Gini coefficient rising from 28.4 to 32.7.
Disparities between regions remain sharp. Rural poverty stands at 36.2 percent, which is more than double the urban rate of 17.4 percent. While macroeconomic indicators such as foreign exchange reserves and fiscal deficits have improved, the data suggests that these gains have not reached low-income households.
IT sector and digital expansion
The Information Technology (IT) and telecommunication sector saw a major expansion, fueled by a $509.6 million 5G spectrum auction. Broadband penetration reached 64.2 percent, nearly doubling the 32.6 percent recorded in 2019.
Cellular mobile services now cover 92 percent of the population. Telecom revenues hit Rs837 billion in the first nine months of the fiscal year, contributing Rs285 billion to the national exchequer. ICT (Information and Communication Technology) export remittances grew by 19 percent, totaling $3.38 billion between July and March. To support further growth, the National Assembly approved the Pakistan Telecommunication (Reorganisation) (Amendment) Act, 2026.
Education and literacy
The national literacy rate for individuals aged 10 and above rose from 61 percent to 63 percent. Punjab leads with a 68 percent literacy rate, while Balochistan remains the lowest at 49 percent.
Despite the two percent improvement in literacy, public spending on education has faced a steady decline. Expenditure for the 2025 financial year stood at Rs962 billion, down from Rs1251.06 billion the previous year. Education spending as a percentage of GDP fell to 0.8 percent, compared to 1.5 percent in 2022-23 and 1.7 percent in 2021-22.
Climate change and economic impact
Pakistan recorded its second-warmest year in 65 years in 2025, following the record-breaking heat of 2024. The national annual mean temperature reached 23.9°C, which is 1.09°C above the long-term average.
Extreme weather events, including the 2025 floods, resulted in 1,039 deaths and displaced over four million people. These disasters caused economic losses totaling Rs822 billion. Consequently, the real GDP growth target was revised downward from 4.2 percent to a range of 3.5 percent to 3.9 percent.
Tax concessions and losses
The cost of tax exemptions and concessions reduced by three percent this year, falling to Rs2.35 trillion, after the withdrawal of certain sales tax exemptions. In dollar terms, these losses amount to $8.5 billion, a figure the survey compares to the amount borrowed from Saudi Arabia to support foreign exchange reserves. Customs duty exemptions specifically dropped by 24 percent to Rs499 billion.
